Governance is an essential component of outsourcing planning and execution. Outsourcing customers, however, often fail to realize that outsourcing governance requires skills and resources that may not be readily available within their organizations. KPMG highlighted key factors to enable better governance in its recently issued “Nine Factors for Successful Governance.”
A few of these governance factors are summarized below:
- Governance Expertise: Operations managers may not have the skills and experience necessary to manage an outsourcing relationship. Additional training and hiring may be required to achieve the value and risk mitigation desired from an outsourcing.
- Retained Personnel: Without oversight, retained personnel may rely on internal support organizations. Redundancies caused by such shadow organizations can erode between 10% and 15% of the outsourcing value.
- Leveraging of Data: Instead of simply relying on a vendor for data relating to the performance of the outsourced services and client satisfaction, companies should consider other independent tools for collecting, tracking, and analyzing such data. This data may be used to supplement the data provided by the outsourcing vendor and be used internally and across multiple vendor relationships.
- Level of Effort: Companies should continually reevaluate their governance needs. Governance efforts typically peak in the transition phase and then may be ramped down as operations stabilize.